Small Simple Dictionary of Economics (Part 5 of 8)

Economics, like other sciences and arts, has its own language. Without knowledge of this language, it is very difficult to understand economics. This has stopped many from following local, national and international economic developments. When I mention that economics is my field of interest, it often creates a sense of uneasiness since, unlike politics and sports, where almost everyone has an opinion, no one has much to say, and the conversation quickly changes to other things. This is unfortunate because economics is everywhere and is one of the most important factors in our lives. It touches almost every activity we undertake. But also, it isn’t easy to have an economics dictionary handy, so I explain about 200 common economic terminologies in a simple way. For some, it may be overly simplified; if that is the case, they can always refer to the Oxford Dictionary of Economics.

Gross national product (GNP): the market value of all the products and services produced in one year by labour and property supplied by the citizens of a country.

Government securities: issued by a government authority, with a promise of repayment upon maturity that is backed by said government. Government security may be issued by the government itself or by one of the government agencies. These securities are considered low-risk since the taxing power of the government backs them.

Hard currency: a currency, usually from a highly industrialized country that is widely accepted worldwide as a form of payment for goods and services.

Hedge: investing to reduce the risk of adverse price movements in an asset.

Holding company: a company that owns other companies’ outstanding stock. The term usually refers to a company that does not produce goods or services itself; instead, its purpose is to hold shares of other companies to form a corporate group.

Hyperinflation: occurs when a country experiences very high and usually accelerating rates of inflation, rapidly eroding the real value of the local currency and causing the population to minimize their holdings of the local money.

Hypothesis: a supposition or proposed explanation made on the basis of limited evidence as a starting point for further investigation.

International Labour Organization (ILO): a United Nations agency dealing with labour issues, particularly international labour standards, social protection, and work opportunities for all.

International Monetary Fund (IMF): an international organization created for:
1. Promoting global monetary and exchange stability.
2. Facilitating the expansion and balanced growth of international trade.
3. Assisting in the establishment of a multilateral system of payments for current transactions.

Import duties: a tax collected on imports by the customs authorities of a country. This tax is used to raise state revenue.

Import quota: a limit on the quantity of a good that can be produced abroad and sold domestically.

Import restrictions: a limit on the quantity of a good that can be produced abroad and sold domestically. It is a type of protectionist trade restriction that sets a physical limit on the quantity of a good that can be imported into a country in a given period of time.

Income: money received, especially regularly, for work or through investments.

Income tax: a government levy (tax) imposed on individuals or entities (taxpayers) that varies with the income or profits (taxable income) of the taxpayer.

Inflation: a sustained increase in the general price level of goods and services in an economy over a period of time.

Infrastructure: the basic physical and organizational structures and facilities (e.g., buildings, roads, and power supplies) needed to operate a society or enterprise.

Insurance: a practice or arrangement by which a company or government agency guarantees compensation for specified loss, damage, illness, or death in return for premium payment.

Interest: the charge for the privilege of borrowing money, typically expressed as an annual percentage rate.

Inventories: a complete list of items such as property, goods in stock, or building contents.

Investment: the purchase of an asset or item with the hope that it will generate income or appreciation in the future and be sold at a higher price.

‘Invisible Hand’: is a metaphor used by Adam Smith to describe unintended social benefits resulting from individual actions. Smith employs the phrase with respect to income distribution and production.

International Trade Commission (ITC): an independent, bipartisan, quasi-judicial, federal agency of the United States that provides trade expertise to both the legislative and executive branches.